Comment: Credibility added to Business Bank

Martin Flanagan. Picture: Adrian Lourie
Martin Flanagan. Picture: Adrian Lourie
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THE appointment of a chairman and senior independent director for Vince Cable’s British Business Bank is a significant staging post in the lender’s switch from a civil service unit to PLC status in about a year’s time.

Small and medium-sized enterprises (SMEs) have not been euphoric about the lending initiative – perhaps sceptical about whether a body that is partly a bringing together of many existing UK government business finance schemes can be a game-changer.

But Ron Emerson, in particular, as the chairman of the bank, is a reasonably heavyweight figure to front the operation, usher in solid corporate governance and, not least, lead the search for a chief executive.

Emerson was group head of corporate banking at Standard Chartered Bank and has also held senior management roles with Bank of America and Nomura. In addition, he has been a senior adviser at the Bank of England.

The new senior independent director, Christina McComb, also has good venture capital experience at 3i and so should know the challenges that smaller businesses face.

Cable has said he wants the fledgling British Business Bank to be run on a strictly commercial basis when it leaves the Department of Business mothership, once it gets an expected green light from Brussels on state aid.

If a chief executive with similar credentials to the new appointees is found then it would be welcome. The circle the new body has to square is to give a notable and measurable fillip to smaller business lending while not being a bleeding-heart credit provider.

Taxpayer costs should be kept reasonably reined-in as British Business Bank will have no branch network. Instead, it will use the distribution arms of existing providers, from banks and venture capitalists to angel investors and crowd-funding.

Typically, an SME might see little difference in applying for a loan on the surface. The example given by Whitehall is that a smaller business might go to an existing or challenger bank, be told that, under its normal criteria, the request might have been turned down but do they want to avail themselves of extra British Business Bank finance?

In essence, the taxpayer is playing backstop to existing lending avenues in a bid to stimulate enterprise and job creation, while perhaps also keeping some non-growth, but solvent, SMEs going. On current figures, even the Yes, Minister-version of the British Business Bank is providing an additional annualised half-a-billion pounds of finance to the sector.

If Cable is right and that could become £10bn covering a five-year period then it would still probably not be a game-changer in the SME lending landscape but it would certainly be a positively notable tailwind behind a pressured sector.

Retail sales data shows confidence is returning

Retail sales saw the biggest rise in spending in the July-September quarter – 1.5 per cent – since before the 2008-9 recession.

As we know, inflation is out-running wage awards in Britain PLC, and so one might infer that punters are flashing the plastic again, after paying down bills in the past few years, ­because they feel job security is not the issue that it was at the economic nadir.

It is more evidence that Britain as a whole is ­seeing a recovery in confidence run a bit ahead of the recovery in employment, investment and growth.

Still, as they say, a confident person has already won half the battle.